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On Feb 13, 2013, we retained Becton, Dickinson and Company (BDX - Analyst Report) at Neutral after the company beat Zacks Consensus Estimates for revenues and earnings in the first quarter fiscal 2013.

Why the Retention?

On Feb 5, Becton Dickinson posted first-quarter fiscal 2013 adjusted earnings of $1.35, reflecting a beat of 9.8% over the Zacks Consensus Estimate. Revenues in the reported quarter rose 3.7% (up 5.2% in constant currency) year over year to $1,900.2 million, beating the Zacks Consensus Estimate of $1,864 million.

Over the past 30 days, the Zacks Consensus Estimate for fiscal 2013 has moved up by just 8 cents to $5.72 while for fiscal 2014 it has edged up 5 cents to $6.20 during the same timeframe.

Based on encouraging first-quarter results, Becton Dickinson revised its guidance for fiscal 2013. It now envisages reported sales growth for fiscal 2013 in the range of 3.5% to 4% compared with the prior guidance of 2% to 3%. The company forecasts constant currency revenue growth in the range of 4% to 4.5% compared with 3.5% to 4.5% earlier.

Becton Dickinson now expects reported earnings per share from continuing operations for fiscal 2013 in a band of $5.69 and $5.72 versus the earlier outlook of $5.58 and $5.64. The projection implies year-over-year constant currency growth of 7.5% - 8% for fiscal 2013 or 10.5% - 11% after accounting for the medical device tax implemented in Jan 2013. Further, Becton Dickinson plans to repurchase $500 million of its shares in fiscal 2013, subject to market conditions.

We remain cautious about Becton Dickinson due to the lack of major short-term catalysts. The rising demand for safety-needle products (with higher price points and margins) was the primary driver of the company’s past growth. This is not expected to continue, given that the U.S. market is already largely penetrated.

On the positive side, Becton Dickinson’s preeminent global healthcare products franchise is partly insulated from volatile macroeconomic conditions and structural deficiencies elsewhere in the healthcare delivery field.

Becton Dickinson faces a wide range of competitors, including Baxter International (BAX - Analyst Report) in certain niches, in each of its three business segments. The stock retains a Zacks Rank #2 (Buy).

Other Stocks to Consider

Medical Action Industries Inc. and The Cooper Companies Inc. (COO - Analyst Report) currently retain Zacks Rank #1 (Strong Buy) and Zacks Rank #2 (Buy), respectively, and are expected to do well.

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